STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.
RENEE MONTAGNE, host:
And I'm Renee Montagne.
One year after the peak of the financial crisis, some parts of the economy have improved. The problem at the heart of the crisis has not.
INSKEEP: The foreclosure mess has not really gotten any better. In fact, the numbers keep getting worse. Foreclosures are at record highs and rising. And that's despite a major effort by the Obama administration to prevent them.
NPR's Chris Arnold reports.
CHRIS ARNOLD: To see what's happening with all this, I went to talk to the man in charge of what's called home retention for Bank of America. BofA manages more home loans than any bank in the country.
Mr. KEN SCHELLER (Senior Vice President, Bank of America): This group up here is called the control tower, and what they are doing is they're looking at volumes from all of the different sites…
ARNOLD: Senior Vice President Ken Scheller's offices are in the middle of a giant call center in Plano, Texas. This is the frontline of the foreclosure crisis. If somebody can't pay their mortgage and they call up Bank of America, their call gets routed through here. And there are a lot of calls from people who can't pay. That's why managers are basically running air traffic control here.
Mr. SCHELLER: Essentially, this group and many others are taking, inbound, about two million calls a month to try to keep as many people in the homes as possible.
ARNOLD: Back a year ago, you might remember that Bank of America bought Countrywide, which was collapsing after it made a ton of bad home loans. So, BofA is now managing all of Countrywide's loans, too. Scheller used to work at Countrywide. He says that that the bank has 8,000 people working on this now.
Mr. SCHELLER: …that are dealing specifically with the foreclosure crisis. That number's doubled in the last year, and tripled before that.
Ms. TIFFANY PALMER (Call Center Employee, Bank of America, Plano): Yes ma'am.
(Soundbite of laughter)
Ms. PALMER: Oh, thank you.
(Soundbite of laughter)
ARNOLD: Out on the call center floor, Tiffany Palmer is telling a homeowner that it looks like she's qualifying for a loan modification. The homeowner can't afford the current payments. And through President's Obama so-called Making Home Affordable plan, Bank of America is likely to lower the interest rate so the family can keep their house.
Ms. PALMER: So, another satisfied homeowner.
(Soundbite of laughter)
ARNOLD: So, she seemed happy. What was she saying?
Ms. PALMER: Oh, yeah. Well, she was just thank you, thank you, thank you. I'm excited to make my payments, load off, and she was excited.
ARNOLD: Palmer says she sees more and more homeowners these days who are in trouble because they've had their hours cut at work or a spouse that's lost a job. With the recession, there are now just a lot more middleclass people with decent credit who can't pay their mortgages. So, when they qualify for a loan modification…
Ms. PALMER: They're just overwhelmed that that it's finally good news, and, you know, that they'll make their payments again. And some of them cry. I mean, you sometimes get really emotional. And they're just happy and they're - they just thank you.
ARNOLD: Cutting people deals like this can actually make very good business sense, because lenders can lose tens of thousands of dollars if they have to foreclose on somebody. Ken Scheller.
Mr. SCHELLER: In most cases, the rate modification to get the customer making payments again is a much better financial situation for everyone.
ARNOLD: But the problem is in a lot of cases, that doesn't happen. The U.S. Treasury Department has started issuing foreclosure report cards for the various banks. The latest, just released this morning, found that Bank of America had so far only modified 7 percent of its delinquent loans through the president's plan. That's nearly twice as many as the month before. So there are still a lot of unsatisfied customers, too.
Ms. JANINE EMLINGER: They keep telling me I had to send them my financial information and my tax returns, which I have done five times.
ARNOLD: Forty-eight-year-old Janine Emlinger is a homeowner in Curtis, Ohio. She says she's been calling for a year trying to get a loan modification, but Bank of America keeps losing the documents that she sends in. And she keeps falling further behind on her payments.
Ms. EMLINGER: I'll tell you, it's very, very stressful, and it weighs heavy on you. I don't know where I'm going to go.
ARNOLD: Emlinger has been in her house for 22 years. But she says she got lied to by a mortgage broker. She thought she was getting a fixed-rate loan, but wound up in one of these crazy adjustable loans where her payments went way up. And as is often the case, Bank of America did not make this loan. The mortgage company that did went bust, but Bank of America is now managing, or what's called servicing the loan. So, it basically decides Emlinger's fate - whether she gets to keep her house.
Ms. EMLINGER: To me, it's an awesome house. It's not quite two acres. It's got a pond. It's a wonderful place to raise grandkids. I would love to do that.
ARNOLD: And Emlinger's got a lifetime of memories in her home, with first her kids and now her nephews coming by.
Ms. EMLINGER: It's just awesome to go pick them to see them, you know, riding the four-wheeler out in back, or fishing in my pond and catch bluegill. It's those kinds of things that maybe gone, you know. And to be some place for 22 years, I mean, you work your life for your family and your kids and have a nice place for them to call home, and to have somebody just all of a sudden say, you know, we're going to take it…
ARNOLD: And here's the thing. Emlinger seems like the perfect candidate for a lower interest rate. That way, she could afford the house, and she's got guaranteed income. It turns out that she used to work for the city mowing grass, and got hit by a truck while on the job. And so she gets state disability checks for the rest of her life.
Lately, a friend of hers who works in the mortgage business has been calling on her behalf to ask Bank of America for help.
Ms. EMLINGER: You know, every time she calls them, they tell her that I don't qualify, every single time. And then they'll tell her that we have to start all over again.
ARNOLD: After NPR inquired about her case, Emlinger says the bank is now calling her to negotiate an affordable loan. But it's still unclear why she was denied so many times over the phone.
Mark Pearce is a deputy banking commissioner in North Carolina. He's part of a nationwide task force on the foreclosure crisis.
Mr. MARK PEARCE (Deputy Banking Commissioner, North Carolina): I tell you, I see, every day, people that are denied for loan modifications when we don't quite understand what the rationale behind it is.
ARNOLD: Pearce says it's not just Bank of America. He says that basically what's going on is that the banks are making these decisions about who gets help and who doesn't inside of a black box in their computer systems. It's not transparent. And he says that homeowners often aren't told why they don't qualify.
Mr. PEARCE: And oftentimes, we find that the rationale is, you know, the paperwork didn't get filed, or they, you know, lost the document, or they needed updated financial information and didn't get it.
ARNOLD: A lot of people think the banks are still just overwhelmed by the millions of people who are in trouble, and that they haven't put the right technology and training in place. Others think, too, that the banks may be skeptical that these modifications are actually going to work. Whatever the reason, Pearce says even now, a couple of years into the mortgage crisis, the bank's systems to prevent foreclosures often still seem scrambled up.
Ms. CRYSTAL INGRAM (Loan Serving Center Representative): Thank you for calling loan servicing center. My name is Crystal. May I have the loan number, please?
ARNOLD: Back at the Bank of America call center, Crystal Ingram is taking a call from a homeowner who is losing one of his two jobs. He's having trouble making his payments, so she plugs his financial information into her computer.
Ms. INGRAM: I'm going to run this and see if I can get a recommendation for you. Give me one moment.
(Soundbite of typing)
Ms. INGRAM: Sir, at this time, I'm not getting a recommendation for modification. If you income changes in any way, you are going to need to come up with some more income. You do have to be able to support a payment.
ARNOLD: But looking over Crystal's shoulder here, the homeowner still makes $2,400 a month, and it looks like he actually should qualify for help through that government plan, the Making Home Affordable plan.
But it did seem like this same guy might qualify for the loan modification.
Unidentified Woman: He doesn't right now.
Ms. INGRAM: He wouldn't qualify for an interest rate reduction. He's just - it's his income. He just is not making…
ARNOLD: But in this case, too, after NPR inquired further with supervisors, it turned out he actually did qualify. So even just while I was at the center, either the computer or somebody made a mistake and a homeowner got rejected when they shouldn't have.
Ms. INGRAM: It doesn't show that you can support a repayment plan. Okay?
ARNOLD: In the end, the bank did offer the homeowner a loan modification. Bank of America says while NPR's inquiry may have expedited that decision, the bank would have come to the same conclusion through its own second-look review process.
Still, housing advocates say thousands of people are getting denied for help by the major banks when they should qualify, and many don't get saved by a second look.
Meanwhile, this year alone, we're on track to see two million people lose their homes through foreclosure. That's the most since the Great Depression.
Chris Arnold, NPR News.
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